The French holding company, parent of Euro RSCG Worldwide and Arnold Worldwide, reported revenue dropped 18.8% during the first half of the year, or 6.8% after adjusting for currency and acquisitions. Revenue growth deteriorated from a drop of 5.8% in the first quarter to a second-quarter drop of 7.8%.
Weakend marketing services
Revenue growth deteriorated during the quarter, with unexpected weakness in June, said Chairman-CEO Alain de Pouzilhac. Results were affected by the strength of the euro against the U.S. dollar, as well as weakness in marketing services activity in Europe, Mr. de Pouzilhac said. The marketing services softness was offset partly by strenghtened activity in traditional advertising in North America, said Chief Financial Officer Jacques Herail.
One global network
Due to those conditions, Havas management announced the company will undergo another reorganization to streamline its structure into a single global network, Euro RSCG. Arnold Worldwide will become a "creative alternative" in key markets worldwide, and media services network MPG will handle media assignments worldwide, as well as seek clients on its own. Specialized services companies -- including health care and recruitment advertising -- will be integrated into either Euro or MPG and those which don't fit into either will be sold, Mr. de Pouzilhac said.
The reorganization will focus Havas on activities in areas showing growth and deal with market volatility without counting on an economic upturn for growth, said Bob Schmetterer, president and chief operating officer. Havas management plans to meet with analysts on Sept. 18 to spell out the plan in detail.
This is Havas' second reorganization in a year. In May 2002 Havas split Euro RSCG's U.S. operations into two agencies, New York-based Euro RSCG MVBMS Partners and Chicago-based Euro RSCG Tatham Partners.